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Casual Articles - 10 Crucial Exit Strategies Leading to a Successful Sale of Your Business
Expatriates and foreign nationals who relocate to the United States to live and work often have mixed perceptions about this young nation. Those feelings are probably best described by the late Irish poet and playwright, Oscar Wilde, who referred to America as “a land of unmatched vitality and vulgarity.”While most Americans rarely think of their country as “foreign,” the fact is that non-Americans who relocate to the United States to do business and “do lunch” are often surprised to find they experience a severe case of “corporate culture shock.”According to recently conducted research with dozens of foreign business professionals working in Atlanta and other southeastern U.S. cities, the human resource departments of multinational corporations are woefully inadequate in preparing foreigners for the American workplace. The purpose of the study was to learn about foreign managers’ experiences and attitudes regarding the American business culture. More than half of this diverse group of CEOs, CFOs, vice presidents, directors, managers, engineers, and analysts were European. In total, 26 different countries were represented.<
Still other stories show how the lack of exit strategies either resulted in short-term cash flow problems (tax issues due to stepped up asset values) or lifestyle issues (annuity issues relating to the timing of payments from the business). In several instances, the lifetime legacies the sellers wanted to preserve were lost because they had failed to prepare for the future. Growth strategist and succession planning consultant, Aldonna Ambler, CMC, CSP, has observed, “Some busine
Companies needing the services of international incorporation may want to consider the nation of Belize. Belize offshore companies have a number of distinct advantages for corporations. First, the country has streamlined the incorporation process so that it is quick and efficient, making it attractive to busy business owners. The country made these changes in 1990 when their legislature passed a law to make it easier for people in other nations to start Belize offshore companies.Belize in general requires only one director or shareholder, meaning that a single person can incorporate in Belize without needing the cooperation of other people. Individuals or other companies can incorporate Belize offshore companies, so it is easy to work within the framework set up by the Belize banking industry. The nation also guarantees confidentiality, which is wonderful in a world when financial information often is not kept confidential enough.Belize permits the shareholder and director of a company to be the same person. That means that you really can set up a company on your own. You can be the director of the Belize offshore company a
Good deals don’t just happen. They take preparation and work. Often a great deal of work and years of preparation are consumed before a sale can even be contemplated. Forging the transaction, itself, may take anywhere from four months to two years, and the payout, unless you sell at a discount, can easily be another five years. Good succession planning, and the development of viable exit strategies, are key to crafting the best deals.
No plan, no profit. What happens when there are no exit strategies?
Bruce Barren, Group Chairman of The EMCO/Hanover Group, international merchant bankers who have concluded more than $3 billion in financial transactions, puts it this way, “If you want to ensure a successful transition, you need to develop a package of exit strategies as part of your overall succession plan. Everyone in business has heard horror stories detailing what happened when there were limited or no exit strategies. The more exit strategy capabilities, the higher the success rate for transactions. Success is, of course, contingent on being realistic, particularly in relation to the reliability of financial projections.”
Some horror stories focus on owners selling out for too little because they did not know what their business was worth, had not developed the people and system infrastructures to demonstrate value to buyers, and were forced to sell at a discount or on compromising terms. A few stories tell of how sellers failed to identify, or provide for, all contingent liabilities. They were ruined when the claims later passed through to them. In instances where the founder sells out and remains with the business, poor deals can mean years of what can only be called “indentured servitude.”
Still other stories show how the lack of exit strategies either resulted in short-term cash flow problems (tax issues due to stepped up asset values) or lifestyle issues (annuity issues relating to the timing of payments from the business). In several instances, the lifetime legacies the sellers wanted to preserve were lost because they had failed to prepare for the future. Growth strategist and succession planning consultant, Aldonna Ambler, CMC, CSP, has observed, “Some busines
1. Put yourself in your client’s shoes Understanding as much about your clients perspective is vital in developing rapport. Growing a strong & positive relationship where you focus on your clients needs, problems, challenges & desires will ultimately lead to the successful matching of your products or services…and for the best possible motives...THE WELFARE OF YOUR CLIENT. Be sure to use ‘YOU’ language – this is where you talk about them and not yourself. As soon as you hear yourself saying ‘we’ or ‘I’ you need to switch. This will be much more engaging for your client and they’ll feel you are more interested in them than selling yourself.2. Ask open questions Asking closed questions will give you 1 – 2 seconds before having to come up with the next question. Your client’s response will either confirm or decline your question, and won’t give you any information about them or their needs. Asking open questions which start with When, Where, How, What and Who will give you useful information that will help you provide exactly what your client wants. Avoid questions starting with Why, as they are very confrontational – no
No plan, no profit. What happens when there are no exit strategies?
Bruce Barren, Group Chairman of The EMCO/Hanover Group, international merchant bankers who have concluded more than $3 billion in financial transactions, puts it this way, “If you want to ensure a successful transition, you need to develop a package of exit strategies as part of your overall succession plan. Everyone in business has heard horror stories detailing what happened when there were limited or no exit strategies. The more exit strategy capabilities, the higher the success rate for transactions. Success is, of course, contingent on being realistic, particularly in relation to the reliability of financial projections.”
Some horror stories focus on owners selling out for too little because they did not know what their business was worth, had not developed the people and system infrastructures to demonstrate value to buyers, and were forced to sell at a discount or on compromising terms. A few stories tell of how sellers failed to identify, or provide for, all contingent liabilities. They were ruined when the claims later passed through to them. In instances where the founder sells out and remains with the business, poor deals can mean years of what can only be called “indentured servitude.”
Still other stories show how the lack of exit strategies either resulted in short-term cash flow problems (tax issues due to stepped up asset values) or lifestyle issues (annuity issues relating to the timing of payments from the business). In several instances, the lifetime legacies the sellers wanted to preserve were lost because they had failed to prepare for the future. Growth strategist and succession planning consultant, Aldonna Ambler, CMC, CSP, has observed, “Some busine
If you want to speed up your business in 2007, you'll need to fine-tune your business approach and utilise your resources to their full extent. However, like many business owners, you may be reluctant to tie up your capital. So where can you turn to if you're looking to finance major business-related purchases such as commercial vehicles, manufacturing machinery or IT equipment?The answer is simple: asset finance. Asset finance works in such a way that the money you borrow is secured upon the business assets you acquire. For instance, if you're planning to invest in a fleet of commercial vehicles, the money you borrow for your purchase will be secured solely on those vehicles. This means no other part of your business will be committed to - or at risk from - the deal.But asset finance has even more to offer: because this type of finance plan is secured on the assets concerned, it's very cost effective. It can, for example, release your business capital and free up your cash flow, allowing you to invest in new opportunities. Asset finance can also improve your return on investment and profit margins, as well as help you make
Some horror stories focus on owners selling out for too little because they did not know what their business was worth, had not developed the people and system infrastructures to demonstrate value to buyers, and were forced to sell at a discount or on compromising terms. A few stories tell of how sellers failed to identify, or provide for, all contingent liabilities. They were ruined when the claims later passed through to them. In instances where the founder sells out and remains with the business, poor deals can mean years of what can only be called “indentured servitude.”
Still other stories show how the lack of exit strategies either resulted in short-term cash flow problems (tax issues due to stepped up asset values) or lifestyle issues (annuity issues relating to the timing of payments from the business). In several instances, the lifetime legacies the sellers wanted to preserve were lost because they had failed to prepare for the future. Growth strategist and succession planning consultant, Aldonna Ambler, CMC, CSP, has observed, “Some busine
Six personal gifts, to control your own destiny and stay GREAT!Greatness is being responsible, and doing what is expected of you.To be in control of your own destiny you must be pro- active. Life takes place in a decision. When you take action to make something happen, stuff is going to happen. What to do about what happens, after you make something happen is where you take control. When stuff happens that you did not plan on, that is opportunity knocking!First personal gift: Authority: Without authority someone else is running the show. You are the authority in your life, nobody thinks in your mind. You are the center that watches and runs the show that can choose which way it will go. The I am consciousness. Take charge of your own destiny. Guess what? Now what?Second personal gift: Commitment: Without commitment there is no long term persistence. Persistence creates desire and builds knowledge. Knowledge must build, because of so much opportunity. One must have a heart felt commitment in any endeavor they undertake. Be committed to yourself first, your family second, your profession third
Some horror stories focus on owners selling out for too little because they did not know what their business was worth, had not developed the people and system infrastructures to demonstrate value to buyers, and were forced to sell at a discount or on compromising terms. A few stories tell of how sellers failed to identify, or provide for, all contingent liabilities. They were ruined when the claims later passed through to them. In instances where the founder sells out and remains with the business, poor deals can mean years of what can only be called “indentured servitude.”
Still other stories show how the lack of exit strategies either resulted in short-term cash flow problems (tax issues due to stepped up asset values) or lifestyle issues (annuity issues relating to the timing of payments from the business). In several instances, the lifetime legacies the sellers wanted to preserve were lost because they had failed to prepare for the future. Growth strategist and succession planning consultant, Aldonna Ambler, CMC, CSP, has observed, “Some busine
If you don’t, it could cost you a lot of money. Particularly if you’re a small business, start-up or a company looking for short-term office accommodations. At first glance you might say to yourself, “Executive suites sound way too expensive for my budget.” But don’t be fooled by a name. If you’re looking to set-up and staff an office, executive office space could save you as much as 70% over commercial office space. Executive suites go by several different names. They might be called: Shared Office Space Temporary Office Space Executive Office Space They all refer to the basically the same type of money saving, anti-hassle, easy to set up office space that can be found in most cities in the U.S. and even overseas. They are often located in prestigious office buildings which give you the look of success before your name even goes on the door. So why are ‘executive suites’ often better than commercial space? The word ‘Contract’ is one big difference. Most commercial space requires a long-term contract, which is not altogether bad if you’re
Still other stories show how the lack of exit strategies either resulted in short-term cash flow problems (tax issues due to stepped up asset values) or lifestyle issues (annuity issues relating to the timing of payments from the business). In several instances, the lifetime legacies the sellers wanted to preserve were lost because they had failed to prepare for the future. Growth strategist and succession planning consultant, Aldonna Ambler, CMC, CSP, has observed, “Some business owners need to be constantly reminded that one of their major goals (if the THE major goal) is to increase the VALUE of the business. Not only will the business owner have the satisfaction of a job well done, he/she ensures financial security when there is a strong business to sell.”
How do you prepare succession and exit strategies that make you feel good about the deal and help the buyer feels good about signing your check?
Barren notes, “Preparation is everything.” Succession planning tools gets you in touch with your mortality, both physical and psychic. During the process of evaluating options and exit strategies, valuation tools give you a sense of realism about what your business is really worth. Unfortunately too many business owners have a psychic dollar value for their business that few buyers accept. Counting on receiving those psychic dollars at the time of sale, or as part of the transaction, usually results in frustration and disappointment. This is particularly true when the owner is expecting a certain amount from the annuity payments for the business sale to augment other financial planning elements. It’s a rude awakening when it just isn’t there.
Your business, tax and financial advisors need to work hand-in-hand on the company valuation and your personal estate plan, as well as the estate plans of all other principal owners’ of the company. In one of my cases, we postponed the sale of the company for several years to build up its value simply because one of the owners would not have received sufficient annuity value to meet his financial needs in retirement. Trying to force the transaction cold have derailed a deal (buyers usually uncover potential problems during their due diligence) or prompted acrimonious litigation at a later date.
Evaluating exit strategies also brings you face-to-face with the notion of letting go and thinking about what you can do with your life when you don’t have to go to the office anymore, or it’s no longer your job. With founders, it helps to develop a decision as to whether s/he wants the business sold or “adopted,” that is, found a good home under like minded owne
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